M/s G.P. Ispat Pvt. Limited Vs CCE&ST ( CESTAT Delhi)
We are lead to the conclusion that in the case of the appellant, the demand of Central Excise duty cannot be upheld, since the allegation of clandestine removal has been made only on the basis of alleged shortages noticed during stock verification. In the absence of any investigation corroborating the allegation of clearance, we have no option but to set aside the impugned order and allow the appeals.
FULL TEXT OF THE CESTAT ORDER IS AS FOLLOWS:-
The present appeals have been filed against the Order-in-Original No. RPR/EXCUS/000/COM/03-04/2015 dated 29.01.2015 passed by the Commissioner, Customs & Central Excise, Raipur.
2. The appellant is engaged in the manufacture of iron and steel products – M.S. Ingot and TMT Bars falling under Chapter 72 of the Central Excise Tariff Act, 1985. The appellant manufactures M.S. Ingot out of sponge iron and further use such ingots in rolling mill to manufacture TMT Bars with brand “Buland”. In addition, they are also engaged in receiving M.S. Ingots from SAIL to convert the same into TMT bars with brand “SAIL”.
3. The impugned order is the culmination of two different investigations undertaken for different periods. The impugned order has disposed of show cause notices dated 28.03.2013 as well as 30.06.2014.
4. During the period 05.06.2012 to 12.06.2012, Central Excise Officers visited the appellant’s factory and carried out a thorough verification of the stock of inputs as well as finished goods in the factory of the appellant. During this period, the production and clearances in the factory continued but were thoroughly supervised by the Central Excise Officers. In the initial stock taking held on 05.06.2012, the panchnama recorded that against total stock of 10703.714 MT of TMT bars, the total physical stock was 9648.139 MTs, leading to a shortage of 1055.575 MT. The duty involved in such shortage detected was paid by the appellant soon thereafter. After continuing the stock verification on 11.06.12 and after recording the statement of various connected officials of the appellant, the department in the show cause notice dated 28.03.2013 alleged that there was a shortage of “Buland” brand TMT bars to the extent of 9076.766 MT. It was further alleged that this quantity of finished products were cleared clandestinely without payment of duty. Accordingly, Central Excise duty amounting to Rs. 4,36,13,406/- was demanded which came to be confirmed and upheld in the impugned order.
5. The second investigation was commenced on 20.03.2013 by physical stock verification at the appellant factory by the Central Excise Officers alongwith officers of Central Bureau of Investigation. The verification concluded that various quantities of finished products were found short involving total Central Excise duty of Rs. 47,47,339/-. Further, a letter pad was recovered during the course of search which indicated clearances of various quantity of scrap without payment of duty during the period 13.12.2012 to 18.03.2013, totally to the extent of 170.930 MT. The duty liability on such scrap was quantified at Rs. 2,90,398/-. Vide show cause notice dated 30.06.2015 allegations of clandestine clearances of the goods found short were made and Central Excise duty involved therein was demanded. The duty involved to the extent of Rs. 50,37,737/- was confirmed in the impugned order pertaining to this show cause notice. Aggrieved by the impugned order, the present appeals have been filed.
6. With the above background, we heard Sh. K. Krishnamohan Menon, Advocate and Shri H. C. Saini, ld. AR for the Revenue.
7. The arguments made by the Ld. Counsel for the appellant are summarised below:
